United States Ex Rel. Steury v. Cardinal Health, Inc.
2010 U.S. App. LEXIS 22656
| 5th Cir. | 2010Background
- Relator Leslie Steury, for the United States, alleged Cardinal Health and affiliates sold defective Signature Edition Infusion Pumps to the Veterans Administration, violating the FCA.
- Signature pumps allegedly could cause air bubbles to accumulate and enter patients' IV lines, risking serious injury or death, with sales to VA from 1997 to 2006 and production halted after FDA recalls for a separate issue.
- Steury's knowledge of the defect arose in 2000–2001 through doctor reports and internal discussions; she remained employed until September 2001 when she was terminated.
- The United States declined to intervene in 2008; Steury amended to assert false-certification theories, including implied certifications, among others.
- A magistrate judge recommended dismissing for failure to plead with sufficient specificity and leave to amend; the district court adopted the recommendation and entered final judgment dismissing the action.
- On appeal, the Fifth Circuit affirmed the denial of a claim under Rule 12(b)(6) but vacated the final judgment and remanded to permit Steury to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Steury stated an FCA claim by alleging defective VA-purchased pumps | Steury contends Cardinal knowingly sold defective pumps to the Government. | Cardinal argues no falsity or certification ties to payment; no implied certification recognized. | No FCA claim found based on implied or express certification; dismissed. |
| Whether an implied-certification theory can support FCA liability | Submission of payment requests implies certification of compliance with contract provisions. | Implied certification not recognized; not every breach of contract equates to an FCA claim. | Implied certification not recognized here; insufficient to state a claim. |
| Whether the district court erred by entering final judgment before amendment | Steury should be allowed to amend; dismissal without amendment was premature. | No deliberate error; final judgment proper after dismissal. | Final judgment vacated and remanded to allow amendment. |
Key Cases Cited
- United States ex rel. Longhi v. United States, 575 F.3d 458 (5th Cir.2009) (defines FCA materiality and elements (as cited))
- United States ex rel. Willard v. Humana Health Plan of Tex. Inc., 336 F.3d 375 (5th Cir.2003) (standard for Rule 12(b)(6) dismissal and pleading burden)
- United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899 (5th Cir.1997) (Rule 9(b) particularity requirements)
- Mikes v. Straus, 274 F.3d 687 (2d Cir.2001) (implied-certification theories and prerequisites to payment)
- United States ex rel. Siewick v. Jamieson Sci. & Eng'g, Inc., 214 F.3d 1372 (D.C.Cir.2000) (implied certification considerations in FCA)
- United States v. Southland Mgmt. Corp., 326 F.3d 669 (5th Cir.2003) (precondition for payment and certification distinctions)
- Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (2008) (FCA scope post-Allison Engine decision)